IT and Specialty Chemicals Sector Outlook : Insights from Vinit Sambre

According to Vinit Sambre, Head of Equities at DSP Mutual Fund, there are different outlooks for the IT sector and specialty chemicals sector :

Vinit Sambre

IT Sector Outlook

The IT sector is showing signs of improvement :

• Commentary from companies has started improving, especially in the banking, financial services and insurance (BFSI) category.

• There is an assumption that as the US goes through a rate cut cycle, it will bring growth momentum for IT companies.

• While the recent price moves have been rapid, the momentum in IT stocks is expected to be sustained.

Specialty Chemicals Outlook

The specialty chemicals sector presents a mixed picture :

• It is not a homogeneous sector, with different metrics for each company.

• Some companies are still facing challenges, particularly those that had invested heavily in capacity expansion.

• Other companies are emerging stronger, having secured new clients.

• The sector is expected to bottom out over the next year, with many companies starting to see benefits.

• However, challenges remain with subdued prices and high inventories.

Sambre emphasizes being stock-specific when it comes to specialty chemicals, as the recovery is not uniform across the sector.

Market Liquidity and Foreign Investment

Regarding overall market trends :

• Foreign institutional investors (FIIs) have been cautious but are interested in the India growth story.

• Many foreign investors are waiting for some easing in valuations before participating more actively.

• The domestic-driven rally is likely to continue, with shallow declines as investors use dips to build positions.

Sambre believes that barring any major unexpected events, foreign flows into Indian markets are likely to continue as investors seek to participate in India's growth story, especially given challenges in other large economies like China.